When to Refinance My Mortgage

You Ask, We Answer: How Do I Know If It's a Good Idea to Refinance My Mortgage?

Are you interested in paying less per month on your mortgage? Or perhaps you would prefer if your

mortgage was paid off a couple of months – or years – faster? If you are a homeowner with a mortgage,

one option that is open to you is refinancing. In today's post, we will explore the topic of mortgage

refinancing and how to know if it is a good idea.

How Does Refinancing Work?

In short, refinancing is a process in which pay off your existing mortgage and borrow a new mortgage

under a different set of terms. In most cases, homeowners will use the funds from the new mortgage to

pay off the old one. Depending on the terms of your new mortgage, there may or may not be cash left

over which you can use to invest, pay down debts, make renovations or for other purposes.

Refinancing To A Lower Interest Rate

Mortgage interest rates tend to fluctuate over time and because of this, refinancing to a mortgage with a

lower rate is quite popular. If you initially borrowed your mortgage when interest rates were at 5%, you

may be able to lock-in a new mortgage at a lower rate. Note that it can be tough to try to "time" the

mortgage market, so check in with your mortgage professional to find out if the time is right.

Refinancing For Lower Monthly Payments

Another great use of refinancing is to reduce the monthly payment required on the mortgage. If you have

ten years remaining on a 20-year mortgage, refinancing to extend the payments out to 15 years will

lower the monthly payment.

Refinancing To Eliminate Other Debts

Finally, many homeowners will refinance their mortgage to use some of the home's equity to pay off

other debts. For example, a family might have $25,000 in debts that are being charged a higher interest

rate than their mortgage. If they have built up enough equity, they can refinance and draw out $25,000

from the home's value. This shifts the debt from the higher interest areas into the mortgage, where it can

be paid off over time.

As you can see, there are many reasons why you might want to refinance your mortgage. To learn more

about the refinancing process, or to discuss your options, contact us today. Our professional team of

mortgage advisors is ready to help you choose the path that best suits your financial needs.